The following e-mail was received from administration of LGM Fund. It appears, program experienced heavy loss, due to malfunction of trader's account functionality.
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Folks, it is with great sadness that I announce that LGM Fund is being forced to close down due to our market maker liquidating our trading account. As a result of this we are forced to cease operations immediately. What I have attempted to do is provide some answers to some questions that I am sure you have.

What exactly happened.

Well in a nutshell 5 trades were entered into last week in anticipation of the Federal Reserve interest rate announcement. This in itself was not an issue, what was the issue is that these trades were highly correlative which is against our risk management plan. A highly correlative trade is either going long or short the same currency against other currencies OR currency pairs that move sympathetically to each other. When the Fed unexpectedly announced the bailout package the next day, our trades started to move against us. This too is normally not an issue but for some reason our stop loss was NOT triggered which would have contained the losses. At this point, we don't know for sure what happened with our stop losses. Our market maker's record indicate no stop losses were entered, and our trader says he did - we're still investigating.

So by having highly correlative trades and no stop loss we held an overall position which meant unlimited downside loss potential. The end result was that there was a margin call and our account was liquidated.

I thought you had reserves

The short answer is yes, but the long answer is more complicated.

eBullion - eBullion has been known to freeze accounts and intervene with no reason and although we not experienced this, we felt it prudent to only keep as much as we needed in our eBullion account at any one time to meet our payment obligations, hence our heavy usage of our exchange provider. The eBullion reserve money was kept in our trading account and since we employ strict risk management, we didn't feel this money was at risk - we were wrong. This being said though there was one client who made a spend after our Monday clearing, and one client who made a spend on Friday that was mistakenly overlooked. These two clients will have their monies returned them to by the end of the week.

Liberty Reserve - LR has not been known to freeze accounts or otherwise intervene in any way so we didn't see any risk in keeping the reserve funds in our currency account. As a direct result of this, we are able to completely refund all monies to our clients who used Liberty Reserve by the end of this week.

So what now?

Well, we have shut down our website to avoid accepting any further spends. We will be maintaining the email account for a week or so and will respond to any questions/concerns, that you may have. Please keep in mind that we will not respond to any emails that are derogatory, obscene etc. We are all professionals.

Further, we are asking the monitors on this email, to kindly remove us from their sites at their earliest convenience.

I would like to sincerely apologize for this event.

Emil
LGM Fund.
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Any comment about this message, or about the message LIKE this in general?

Is this "just another scam", or perhaps, an "unfortunate failure"?

Any traders around?
Does the "language" makes sense?
What do you think?